Michigan cannabis operator faces allegations over raw materials

For the second time in five months, Michigan regulators are levying serious charges against cannabis processor Sky Labs for obtaining untracked raw materials from unlicensed suppliers, failing to properly account for them in Metrc and combining untested materials into a new product.

The penalties, according to a 10-count formal complaint by the Cannabis Regulatory Agency (CRA), could include the suspension, revocation, restriction, and/or refusal to renew Sky Labs’ business license.

Sky Labs, a vertically integrated operator based in Mount Morris, manufactures and sells a variety of marijuana products, including edibles, vape cartridges and multiple flower strains.

Numerous violations alleged

The CRA alleges Sky Labs acquired more than 1 million grams (2,000 pounds) of hemp isolate from an unlicensed hemp processor or distributor and failed to test any of the batches or provide a corresponding certificate of analysis (COA).

A COA provides a summary of testing results on various product components, including THC potency, heavy metals and certain pesticides.

The other charges against Sky Labs include:

• Initiating material change to its business without CRA approval.
• Failing to accurately enter all transactions, current inventory and other information into Metrc.
• Violating security and camera monitoring requirements to clearly and accurately display time and date.
• Failing to properly tag, identify or record batches in the statewide monitoring system.
• Failing to monitor or log visiting service providers.

The alleged violations were first reported by Cannabis Business Times.

If the CRA takes any punitive action or imposes a fine, Sky Labs can request a hearing within 21 days of the Jan. 7 complaint.

Sky Labs plans appeal

Sky Labs’ attorney told Cannabis Business Times via email that the company doesn’t “… have any comments at this time other than to say that the complaints filed by the CRA are allegations only, and that we do intend to pursue an administrative appeal.”

MJBizDaily reported in August that the CRA filed an eight-count complaint against Sky Labs, including allegations the company purchased unregulated THCA concentrate from outside the state and misidentified the product in state-mandated tracking records.

The agency in 2023 ordered Sky Labs to surrender its processor license and pay a $100,000 fine related to safety violations at its facility and the presence of banned chemicals in its vape products, including vitamin E acetate.

That was among several other violations the agency has levied against the company since 2021.